Home Ltd. owns the building it uses. The building had an original cost of $8,000,000 and accumulated depreciation of $2,400,000 as of January 1, 2002. On this same date, the building, not the land it is built on, was sold to a real estate investment trust for $7,500,000, which also happened to be the building's fair value, and simultaneously leased back to Home Ltd.

The lease has a 15-year term and required payments at year-end (December 31 each year). The payments are $630,000 with no transfer of title or purchase option. Home Ltd. will pay all of the building's operating and maintenance costs, including property taxes and insurance. Home Ltd.'s incremental borrowing rate is 8%, and the building is being depreciated straight-line with a full year's depreciation in the year it is acquired.

1. Prepare journal entries for Home Ltd. to record the sale and leaseback of the building.
2. Prepare the year-end adjusting journal entries for 2002.
3. Show how all amounts related to the sale and leaseback of the building will be presented on the SFP and SCI in 2002.